October 30, 1996
The Honorable Sonya Letson
Potter County Attorney
303 Courthouse
Amarillo, Texas 79101
Letter Opinion No. 96-115
Re: Whether a nonprofit cemetery
association owned entirely by its
members must obtain a permit from
the Department of Banking in order
to sell “pre-need” grave vaults to
its members (ID# 26543)
Dear Ms. Letson:
You have asked this office to interpret certain provisions of
article 548b, V.T.C.S., which concerns the sale of prepaid funeral
services. In particular, you ask whether a member-owned, non-profit
cemetery association that wishes to sell grave vaults to its members on
a pre-need basis falls within the requirements of the act. If so, you
wish to know whether such an association can be granted a permit to sell
such merchandise under the act.
As you describe the facts of the case, the Llano Cemetery
Association, believing it needed a permit from the Texas Department of
Banking to sell grave vaults on a pre-need basis, applied for such a
permit. According to the cemetery association, it was denied such a
permit on the ground that it was not a funeral home.
Your first question is whether an association like the Llano
Cemetery Association is covered by the act. You suggest that it is not,
because it desires to sell grave vaults only to its members, rather than
to the general public. We disagree.
The act defines “person” as “any individual, firm, partnership,
corporation, or association.” V.T.C.S. art. 548b, § 1(b)(8). It
further defines “[p]repaid funeral benefits” to include “caskets, grave
vaults, and all other articles of merchandise incidental to a funeral
service.” Id. § 1(b)(9). Finally, it requires that:
Unless a person holds a permit issued under this Act,
the person may not:
(1) sell prepaid funeral benefits, or accept funds
for prepaid funeral benefits, in this state under any
contract.
Id. § 1(c).
The language of the statute is broad, sweeping, and categorical.
Nothing in the statute exempts membership organizations or non-profit
organizations from its strictures. In order to sell grave vaults on a
pre-need basis, an association of the sort you inquire about must apply
for, and receive, a permit from the Texas Banking Department.
Your second question is whether such an association is eligible
for a permit. We cannot speculate as to any particular organization,
because we cannot resolve fact-based questions in the opinion process.
We note, however, the Llano Cemetery Association’s apparent assertion
that its application, as you put it, “was denied . . . because Llano is
not affiliated with a funeral home.”
We are informed by the Department of Banking that such
associations are indeed eligible, whether or not affiliated with a
funeral home. According to a letter brief from the Department:
With a permit to sell prepaid funeral benefits, a
cemetery that wishes to sell burial vaults and the
opening and closing of such vaults may do so whether or
not the cemetery is affiliated with a funeral home.
Affiliation in this instance is immaterial because the
cemetery can legally provide these particular prepaid
services and merchandise itself; sale of these services
and merchandise does not involve an activity requiring
funeral home licensing. The Department currently
licenses numerous cemeteries such as Llano to both sell
outer-burial containers (including burial vaults) and
the opening and closing of graves or vaults on a
preneed basis.
Letter from Sharon S. Gillespie, Assistant General Counsel, Texas
Department of Banking, to James E. Tourtelott, Office of Texas Attorney
General (Aug. 8, 1996).
Since the Texas Department of Banking is charged with the
administration of article 548b, see V.T.C.S. art. 548b, § 2, its
interpretation is entitled to great weight. See 67 TEX. JUR. 3D
Statutes § 155 (1989). As to your second question, then, we concur that
a cemetery association may receive a permit to sell grave vaults on a
preneed basis.
S U M M A R Y
A member-owned, non-profit cemetery association
which wishes to sell grave vaults to its members on a
pre-need basis must, in order to do so, apply for and
receive a permit from the Texas Department of Banking,
pursuant to article 548b, V.T.C.S. Such an association
is eligible to apply for and receive such a permit
whether or not it is affiliated with a funeral home.
Yours very truly,
James E. Tourtelott
Assistant Attorney General
Opinion Committee